First Marblehead Corp. said Monday it slashed 500 jobs in a move to save $200 million a year, after the company lost a large client amid turmoil in the secondary market for student loans.
First Marblehead, which is based in Boston, helps banks package their "private student" loans into bonds and sell them to investors. Last month, Bank of America _ which accounted for about 15 percent of First Marblehead's annual revenue _ said it would stop doing business with the company.
A nonprofit organization that guarantees to cover losses on student loans, The Education Resources Institute, filed for bankruptcy protection earlier this year. Bank of America had a provision that allowed it to end its relationship with First Marblehead if TERI went out of business.
"This has been an extraordinarily challenging business environment for our company," said Chief Executive Jack Kopnisky in a statement. "The market and credit conditions have not improved and TERI's bankruptcy filing has forced our business situation to change quickly."
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